Down 30%, 3 Red Flags That Suggest Netflix's Best Days Are Behind It

If investors are coming up with a list of the best stocks of this century, there's no doubt that Netflix (NASDAQ: NFLX) would be in that group. It's certainly one of the most disruptive businesses on the planet. And the performance of its shares, which have risen a jaw-dropping 22,700% in the past two decades, proves this point.

Since the streaming stock hit a peak in June 2025, though, it has traded down 30%. Maybe the market is losing interest. Here are three red flags that might suggest Netflix's best days are in the past.

Image source: The Motley Fool.

1. Netflix almost took on a massive acquisition

Although on Feb. 26, Netflix walked away from the deal to purchase certain assets of Warner Bros Discovery, this was a sizable potential transaction valued at nearly $83 billion in enterprise value. It was an unusual announcement coming from Netflix, which has historically avoided large deals. Instead, it relies on organic growth to increase its revenue and membership base.

However, this proposed transaction might have been a clear sign that Netflix's management team is in need of a deeper content catalog than it can develop internally to keep the company's success going. And it was willing to pay a pretty penny and take on significant debt to do so.

2. Engagement metrics are troubling

It's no surprise that engagement is a critical data point to watch because it indicates the value Netflix is offering to its viewers. According to data from Nielsen, this streaming platform's share of daily TV viewing time in the U.S. went from 7.5% in Q4 2022 to 8.8% in January 2026. During that same time period, the overall streaming market's share (excluding Netflix) jumped 54% from 24.8% to 38.2%. In other words, Netflix is losing its dominance at attracting eyeballs within its own market.

And it falls far behind Alphabet's YouTube. The user-generated video streaming platform commanded 12.5% share of U.S. TV viewing time in January, which was 42% more than Netflix.

3. Content costs could keep going up

After it backed off from the Warner Bros Discovery acquisition, Netflix said that it was planning to spend $20 billion on content in 2026. A decade before in 2016, it spent $6.9 billion here.

The industry is hyper-competitive these days, as research from The Motley Fool reveals that 62% of customers think there are too many streaming services on the market. This means that there is also competition to create and license content. And now that Netflix is pushing further into live sports and events, which have bidding processes, there's really no question that content costs will continue to rise over time, and maybe more than expected.

Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Netflix, and Warner Bros. Discovery. The Motley Fool has a disclosure policy.